I use a grinding stone on the dremel and leave the last mm or 2 as well so the pinions can't come off. The pinion came loose once or twice with my fiegao, but I didn't loose the pinion because of the end being bigger.
With my neu I think I may have done the flat spot a bit better (still with the lip at the end though), because I haven't had a loose pinion in the last 6 months I've had that motor, I don't use loctite on the set screws.
I've put pinions on the shaft with the set screw facing both ways and the lip at the end hasn't gotten in the way.